Representation With No Taxation

by Herbert I. London
October 21, 2009 at 6:30 am

http://www.gatestoneinstitute.org/871/representation-with-no-taxation

The American Revolution had one inspirational lament that echoed through the pages of our national history: “No taxation without representation.” For our Founding Fathers, these words meant that the British imposition of taxes was unacceptable without the expressed will of the people. It was an idea that was built into a republican form of government and was as much a British idea as an American one.

In 2009, a new, arguably perverse, view of this proclamation is in vogue: “No taxation with representation.” It is increasingly clear that at least 45 percent of the American people do not pay income tax yet are key to the election of many representatives. Their votes count as much as the 55 percent who do pay taxes. Moreover, if one relies on the quasi-Marxist rhetoric that emanates from Washington, the nontaxpayer has a claim on the assets of others.

In the Republi,c Plato argues against democracy: he feared the power of the mob -- those free-riders who expect others to care for and attend to them. When their numbers increase to some tipping point, democracy is imperiled.

At the moment one percent of the population pays about 40 percent of the tax revenue for the country. When President Obama talks about “spreading the wealth,” what does he mean? Should one percent pay 50 or 60 percent and, if so, what are the disincentives to wealth creation that will emerge? As it stands, ten percent of the population generates over 90 percent of the revenue.

The influence of high taxation on a minority invariably breeds resentment. But the effect on the large majority is just as significant. For those who obtain benefits without payments, an entitlement psychology unfolds: the less-wealthy might feel it is their due, as if as if wealth itself is a sin. During the Obama campaign, one adherent said she favored the Democratic nominee because he would assist with her mortgage, her car payments and her accumulated debt.

This in a nutshell is the spirit of national welfare: something for nothing. Is she concerned about a possibly disproportionate tax burden on others? Is she aware of the disincentives for productive activity? Are the politicians who pander to those who crave a hand-out sensitive to the effect of their policies?

As far as she is concerned, a 100 percent tax on others is fine as long as she gets what she feels is due her.

But why should not everyone be taxed? Why not just invert the rate for the poor? Those who have little could pay little, but they could pay something, anything that displays a commitment to the nation and its goals. The nation requires this understanding.

Some have said that there should be a property requirement for voting, a demonstrated stake in the society and a standard that existed before 1820. That idea has no chance of acceptance, nor should it, but I do think that everyone should pay taxes, even if it is $5 or less - a sum that suggests the individual is a party to the national interest, not merely a free-rider.

Even if this gesture is symbolic -- and it certainly would not generate revenue sufficient to deal with unfunded liabilities -- however, it would send a message that we are in this national mission together.

It is time to overcome the belief that a small minority is obligated to underwrite totally the concerns of a large majority. And it is time to suggest that no one is entitled to the free fruit of someone else’s labor.

A tax should be perceived as fair and universal. And if the populace wants the benefits of representation, it should display an interest -- even if in the smallest way -- in participation.. Wasn’t that once the American way?

Herbert London is president of Hudson Institute and professor emeritus of New York University. He is the author of Decade of Denial (Lanham, Maryland: Lexington Books, 2001) and America's Secular Challenge (Encounter Books).

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